Introduction to the HART Credit

Housing and Regeneration Tax Cut
A Proposal

As the ‘Communities Plan’ will no doubt demonstrate, there are immense challenges facing those in the public, private and housing association sectors working to provide good quality housing in sustainable communities. The Government is already devoting tremendous energy and resources to restore the balance to housing markets both in the North, where some markets have failed and in the South, where affordable housing is under pressure due to excessive demand. The cost of funding the range of housing, health, education, employment and community safety strategies necessary to deliver community sustainability is enormous. The Housing and Regeneration Tax Credit (HART Credit) offers a new approach to unlocking private funding for these areas of housing stress.

In considering the challenge of funding the Government’s low and high demand aspirations, Maritime Housing Association has initiated a range of projects to find alternative funding approaches. In 1999, Maritime hosted a conference on the Urban Renaissance in partnership with Liverpool City Council, the Housing Corporation and the European Institute of Urban Affairs to bring American and European experts to consider different methods of tackling regeneration funding.

This conference was the catalyst for engaging with U.S. colleagues on the potential application of their tax credit model for affordable housing. In February 2002, with the support of Liverpool City Council, Maritime brought together U.S. and U.K. experts in tax, development and finance with observers from Treasury, the (then) Department of Environment, Transport, and Regions and The Housing Corporation. In adapting U.S., experience to the U.K. context. delegates designed four potential products for further exploration.

Working primarily with David Smith (Affordable Housing Institute, Boston), George Bull (Baker Tilly, London), Daniel S. Anderson (Bank of America, Portland, Oregon) and Jacqueline Rogers (University of Maryland), we combined the best aspects of the U.S. tax credit to specifically address the issues of housing and regeneration in the U.K. The resultant presentation made by David Smith at the Urban Summit drew overwhelmingly positive responses from the private sector and others.

The experience of the seminars and their feedback has now been crystallised into the attached paper. The HART Credit is policy instrument of significant versatility. It is a tax credit that can maximise private investment into affordable housing for rent and housing for sale; housing with ground floor retail (e.g. High Street) as well as historic buildings. It has been designed to work in areas of market failure and market overheating. It can be targeted by Government to achieve policy goals in specific areas and is complementary to existing grant programmes. It can be used by developers and individuals in accordance with guidelines and project approvals set by Government.

The next step is to promote the widest possible discussions, particularly with Government, to confirm its principles and policy applicability.

However, a firm basis of evidence is essential for policy making. Therefore we have outlined a possible pilot for the tax credit within the Merseyside Housing Market Renewal Pathfinder. This pilot would determine whether the mechanism does indeed attract private sector investment into those inner core areas where only direct grant funded schemes would otherwise proceed. This would also enable Government to assess the most efficient delivery vehicles for the credit.

We look forward to working creatively with Government and the private sector to see if the Housing and Regeneration Tax Credit (HART Credit) can become a new tool to contribute to the creating sustainable communities in the U.K.

Andrea Titterington
Programme Director
New Anfield; Liverpool Football Club
Andrea.Titterington@liverpoolfc.tv